Labour law must support migrant entrepreneurship in South Africa

By: Olusola Bodede

The major determinant of migration is basically in search of job and better wages. Africa has witnessed, to a large extent, intra-regional migration of workers which is mainly dominated by the low-skilled workers. South Africa has been receiving lots of migrants especially in the mining and agricultural sectors. Labour migration in South Africa is basically for the purpose of employment which by extension, has influenced the economy and the society. As at 2015, South Africa is the largest host of international migrants from Africa. For a substantial number of years, South Africa has experienced workers migration from all over the world. South Africa is currently hosting about 3.1 million of migrants against 2.1 million for Côte-d’Ivoire and 1.2 million for Nigeria. According to the United Nations’ Department of Economic and Social Affairs, out of 7,481,000 migrants in the SADC region excluding irregular migrants, South Africa alone received 4,036,696 migrant inflows consisting of economic migrants, asylum seekers, refugees and trafficked and smuggled persons. This high influx of migrants has resulted in workplace tension between South African nationals and immigrants. The high demand for workers in domestic, agricultural, mining and health sectors are the major drivers of migration within the continent. There is now diversification of labour migration to other sectors such as hospitality, security, transport and other services. Most of the migrants include African migrants, asylum seekers and forcibly displaced persons. The International Labour Organization puts into consideration labour market needs and covers all migrant workers irrespective of nationality, skill level and immigration status. Migration of labour workers to and from South Africa should be such that it contributes to South African society, does not undermine its own labour protection regime and serves regional integration goals.

Legal and administrative support to migrant entrepreneurship will make it easier for labour migrants to set up and run businesses unhindered. In most instances, foreign migrants are not always programmed in the bureaucracy and legal/administrative requirements needed to start a business in the destination country. Therefore, to sustain migrant entrepreneurship in South Africa, there must be friendly bureaucratic processes that will make obtaining a licence, social security obligations, labour law and business registration easy for intending labour migrants. Legal and administrative support should spell out series of steps needed to start and run a business which may come through training and personalised advice.

Reasons why migrant entrepreneurship should be supported by labour laws in South Africa

• It will boost the South African economic: Entrepreneurship is one of the pillars for sustainable economic growth. According to Organisation for Economic Co-operation and Development (OECD) publishing, “Immigrants also have a positive net impact on the government’s fiscal balance. This is due to the fact that they tend to pay more in taxes, especially in income and value added taxes.” Also, “The impact of immigration on gross domestic product (GDP) per capita is positive, and the estimates from an econometric model show that immigrant workers may raise the South African income per capita by up to 5%.” Migrant entrepreneurship will boost the socio-economic status of the country if supported by labour law. Some of the business venture by the migrant workers, apart from creating job opportunities, can also improve revenue generation by the country. The more the trade and sales, the more the economic benefits.
• It will reduce crime rate: Migrant entrepreneurship will reduce the crime rate in the society. This is because many of the highly skilled migrant workers may employ more workers in their enterprise. Such enterprise might grow into a large firm. Such ventures also known as high-growth firms, account for most of the job opportunities in developed and developing countries. Even for the lower-skilled migrants, their small stores, laundry, day care and restaurant can provide a platform for the employment of few number of people. Some of the small businesses may have low economic prospects, it does provide some income for people who could have been jobless. When people have a means of livelihood, the crime rate is bound to reduce drastically thus making the society safe for all.
• It will reduce unemployment rate: Labour migrants usually provide employment opportunities for some locals by virtue of their skills and ventures. Although some of these foreign workers had to resort to entrepreneurship due to lack of other employment opportunities while others are entrepreneurially oriented in their disposition. Reports has shown that migrant workers have higher rates of self-employment than natives in most of the developed and developing countries. Self-employment by the labour migrants may not be a guarantee for higher income compared to salary earners but it will thus reduce the unemployment rate in the society. Some of the businesses range from the high growth to low-skill businesses. Some skilled migrants such as the Doctors, Dentists, Nurses and Physiotherapists can be self-employed and also provide opportunities for job seekers to work in their facilities. According to World Bank report, “immigration has a positive impact on local employment, labour earnings, and wages. The estimated effects of immigrant growth on local employment are positive and highly significant in all specifications and are similar in terms of magnitudes. Report further showed that a one percent increase in the number of immigrants relative to the previous period raises local employment by 0.2 percent. In other words, one immigrant worker generates approximately two jobs for locals.”

Most of the labour migrants lack access to credit especially from financial institution because of lack of collaterals. It then means that migrant entrepreneurs will have to depend on small loans from families and friends to establish any venture. This may be a discouraging factor especially when the desired business requires a huge starting capital for better profit. If labours laws are tilted to support migrant entrepreneurship, more businesses will spring up which will ultimately be beneficial to the states and her citizens.

• It will reduce xenophobic attacks: In recent times, there have been xenophobic attack in South Africa. The locals believe labour migrants are in their country to take-up the available jobs. The believe of some South African citizens is that foreign migrants especially from neighbouring African countries are responsible for increase in unemployment rate over the years. However, Organisation for Economic Co-operation & Development, International Organization for Migration and International Labour Organization differ on this assertion in respect to their research-based reports recently published. Most of the low skilled labour migrants such as those owning shops, restaurants, laundry and transport services are those frequently caught in the web of xenophobic attacks. It is expected that migrants with proper documentation should be encouraged to contribute meaningfully to the South African economy. Except there are labour laws to support migrant entrepreneurship in South Africa, hostility by the locals against the foreign migrants will continue unabated.

In conclusion, labour migrants have a higher rates of business failure than the natively owned ventures due to lots of militating factors. Self-employment and entrepreneurship remain a promising option for labour migrants to have access to labour market. In view of this, they need adequate support in terms of laws and policies to make them succeed in their adventure.

Dr. Olusola Bodede is a researcher. He writes in his personal capacity.